PM starts power war with states over electricity prices

JULIA Gillard today will take on state governments over rapidly rising power costs, demanding they do more to curb price increases.

''Power bills have become the new petrol prices,'' she will say, insisting that the current rate of electricity price increases - excluding the carbon price - cannot continue.

''Australia did not need nearly 50 per cent price increases for households over the last four years - and Australians can't afford the same kind of increases over the next four years,'' she will tell the Energy Policy Institute of Australia in Sydney.

The PM is going on the front foot both to separate in people's minds the general rises from those flowing from the carbon tax, and to show that she is standing up for battlers who are struggling with cost of living pressures. ''It's a huge cost to our economy,'' she will say. ''And it's a threat to fairness in our society.''

Arguing that power price rises fall far too heavily on battlers who can't afford new, more efficient white goods or solar panels, she will say that this is exactly the type of issue that a Labor government should be looking at.

Her criticisms do not apply so much to Victoria, where electricity supply has been privatised, as to states with utilities still in government ownership.

She will point out that half the extra costs have been due to increased network charges: people have been paying more for the so-called ''poles and wires'', not to produce electricity but just to move it around the system.

Making the comparison with petrol prices, she will say power is not just ''an essential of life that always seems to be going up, but a vital

commodity where what we consume each day, or pay every quarter, seems far beyond our control''.

Ms Gillard will identify as causes of the price rises unfinished market reforms, and the action - and inaction - of some state governments. Some are doing well financially out of current arrangements and can, and should, do more to cut price rises, she will say.

She will flag the need to act now - and the steps she wants taken - because the regulatory price determinations to be made from early next year will begin setting prices for the next five years.

"The market for supplying electricity in Australia needs to be more efficient.''

There is state ownership of electricity assets around much of the country, including NSW and Queensland.

"In many places around Australia, the state governments both own lucrative electricity assets and regulate parts of the electricity market.

"The comparison between the private and publicly owned utilities shows the states are doing very well out of this arrangement. Following the recent round of price increases, revenue for enterprises wholly owned by state governments is up 50 per cent over the previous five-year period."

"This was in a period when revenue for the rest of the market players grew less than 30 per cent.

"And while overall electricity demand is falling due to a number of factors, families and pensioners are facing higher prices even while many have been doing the right thing and cutting their use.

"For too long, some state governments have been increasing their revenue at the expense of the family electricity bill - that has to stop."